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Ohio’s move to privatize prison food service, estimated to save taxpayers $15 million annually,
could cause collateral damage to some small businesses.

The Kasich administration proposed, as part of its$63.3 billion biennial budget, to privatize
preparing and serving more than 150,000 meals a day to inmates in Ohio’s adult and juvenile
prisons. The cost savings are estimated at $16.2 million annually under a Kasich administration
plan.

Bids to provide the food-service contract are due on April 12.

Some private vendors that sell to the state are concerned that they will be shut out if a big
company takes over food service.

At the same time, the union representing prison employees is working on a new counterproposal
that it says could save the same amount of money as privatization.

Sam V. Sidoti, president of Stellar International Food Service, a former Columbus business now
located in Plant City, Fla., said he is worried that privatizing food service will hurt his company
and dozens of others. He has had state contracts for 30 years.

“Most of the food that is going to Ohio prisons right now is from small businesses that do $3
million to $5 million a year,” Sidoti said. “This change will put them out of business or hurt them
severely.”

The owner of another supplier, EMM Black Inc. of Dayton, said the change could nearly cripple
his business.

“It will take about half my sales,” said Samuel Black, company president. “It would be very
damaging.”

As many as 456 state jobs could be lost if food service is privatized, but the Ohio Department
of Rehabilitation and Correction said many employees would be offered positions with the private
contractor.

Agency spokeswoman JoEllen Smith said all current vendors, including those in Ohio, could “align
themselves with other interested bidders, potentially as subcontractors, material suppliers or
joint-venture partners.”

Smith said the state agency is trying to find ways to save money without closing prisons or
cutting back on bed space for inmates. She said the state has a $60 million budget hole to fill
because of higher medical and other costs.

Adam Ruth, a corrections officer at the Marion Correctional Institution and part of an Ohio
Civil Service Employees Association team working on a food-service counterproposal, said he expects
it will come in even lower than a previous union proposal that would have chopped the state’s cost
to $1.53 per meal, saving $9.7 million annually.

Smith responded that the state worked with the union in coming up with a counterproposal, “but
it was clear that far greater financial savings and efficiencies had to be achieved.”

There could be other collateral costs, some critics say.

Rick Shafer, a union member and an inventory specialist at the state’s Central Warehouse on
Columbus’ West Side, said switching to a private contractor could knock out 96 percent of the
food-related purchases. The warehouse, which employees 20 people, serves adult and juvenile prisons
as well as the Departments of Mental Health and Developmental Disabilities, and a handful of other
agencies.

Shafer said that last year the agency bought $38 million worth of goods from private vendors,
including 60 in Ohio, and $7 million from minority suppliers.

“They will lose all that business,” Shafer said. “Whoever gets this contract will bring in their
own food.”

Union officials say the state should have learned from a failed food-service test project at the
Noble Correctional Institution in 1998-2000 that was abandoned after it was plagued with cost
overruns and inmates nearly rioted because of the quality and quantity of food.

While prison officials say they are looking to the example of other states that have privatized
food service (Indiana is paying a contractor $1.19 per meal), a recent report by the Ohio
Correctional Institution Inspection Committee urged caution in signing a private food contract.

“If the state wants to consider using a private food-service contractor, it is important that
they select a company that has a proven record of success,” the committee report said. “It is
important that strong contract oversight is in place to ensure the company meets the expectations
and standards in the contract.”